Independent Legal Advice
Independent Legal Advice for a Limited Company Buy-to-Let Personal Guarantee
If your company is taking out a limited company buy-to-let mortgage, the lender will almost certainly ask each director to sign a personal guarantee, and to take independent legal advice before signing it. We provide that advice by secure video call with a solicitor, and email your certificate the same working day as the appointment.
Advice is given by Sarah Allen, solicitor. Last updated .
Why do limited company buy-to-let mortgages need a personal guarantee?
Many landlords now buy rental and holiday-let property through a limited company, usually a special purpose vehicle (SPV) set up just to hold property. Because a company has limited liability, buy-to-let lenders protect themselves by asking the people behind it (the directors, and often the shareholders) to give a personal guarantee. That means if the company cannot keep up the mortgage, the lender can pursue you personally, even though the property is owned by the company. Limited company buy-to-let, portfolio and holiday-let lenders commonly lend on this basis: The Mortgage Works, for example, says in its limited company lending criteria that personal guarantees are required from all directors in all cases.
Why is independent legal advice required?
A guarantee turns limited liability back into personal liability, so lenders (and the solicitors acting for them) want to be sure you understand that before you sign, and that you are signing freely. Independent legal advice (ILA) from a solicitor who is separate from the lender and the company provides that assurance, and produces the certificate the lender needs to release funds. Our certificates are prepared to satisfy standard lender requirements, and if your lender has its own form we complete that instead. Just email info@ilahub.com or contact us.
The main risks, in plain English
Your solicitor will talk through your own guarantee and mortgage offer, but the key points usually are:
- Your personal assets are on the line. If the company defaults and the property sells for less than the debt, the lender can pursue you personally for the shortfall, interest and costs.
- The company shield does not protect you. The whole point of the guarantee is to look past the SPV to you as an individual, so 'the company owns it' is not a defence.
- Joint and several liability is common. If several directors sign, the lender can usually claim the full amount from any one of you, not just a share.
- It can cover more than one loan. Portfolio and 'all monies' guarantees may extend to future borrowing by the same company, so your exposure can grow after you sign.
- Letting income can be variable. Lenders still expect the mortgage to be paid in quiet periods, and your guarantee is what stands behind it.
Lenders whose forms we regularly complete
Limited company buy-to-let lenders usually have their own deed of guarantee and their own certificate of independent legal advice, and many say exactly how they must be signed. Lenders whose forms we regularly complete include:
- The Mortgage Works
- Godiva
- Kensington
- Foundation Home Loans
The Mortgage Works deed of guarantee
The Mortgage Works' deed of guarantee is a good example of what these forms contain. It says at the top that you must take independent legal advice on its terms and effect and should not sign until you have, and that each guarantor uses a separate form. It guarantees everything the company owes under the mortgage, lets the lender come to you without first pursuing the company, is not ended by the guarantor's death, and is signed as a deed in front of a witness who cannot be related to the borrower or the guarantor. The solicitor takes you through each of these points in the appointment.
What to send us: the final deed of guarantee, the mortgage offer, and the lender's own certificate of independent legal advice if it is a separate form. Add each director who is signing to the same booking. Some lenders want the signed guarantee back as a wet-ink original: the advice still happens by video, and you post the signed document to us and we countersign it and return it. If your lender is not listed above, the appointment works the same way.
Director's loans and deeds of subordination
If you have lent money to your own company, for example towards the deposit, the lender may also ask you to sign a deed of subordination, agreeing that your loan will not be repaid ahead of the mortgage. It is a different document from the guarantee: our guide to deeds of postponement and deeds of subordination explains the difference. If you have been sent one as well, mention it when you book so the solicitor can cover it.
Who typically needs this advice?
Directors and shareholders of an SPV or trading company taking out a buy-to-let, holiday-let, portfolio or refurbishment mortgage. It applies to first-time company landlords and experienced portfolio investors alike, and where a company has more than one director each guarantor normally needs their own advice and certificate, and the fixed fee is per person. If your guarantee is for a business loan or a commercial lease rather than a property mortgage, see our personal guarantee and commercial lease guarantee pages.
How ILA Hub's process works
The advice is given by secure video call, from anywhere in the UK. You book online, verify your ID beforehand and upload the mortgage offer and guarantee, then meet your solicitor by video, Monday to Friday, 9am to 7pm. Your signed certificate is emailed the same working day as your appointment, ready for your lender or their solicitors. Fees are fixed per person: Standard £150 with an appointment from two days ahead, Fast Track £250 the next day (booked before 6pm), or Priority Same-Day £350 for the earliest available slot, including same day. See our pricing, then book your appointment in a couple of minutes.
Pricing at a glance
Fixed fee per person, with no VAT added: the fee below is the total you pay. The advice and the certificate are identical on every service. The fee changes how soon your appointment is.
| Service | Total fee per person | Appointment | Certificate |
|---|---|---|---|
| Standard | £150 | Appointment from two days ahead | Emailed the same working day as your appointment |
| Fast Track | £250 | Appointment the next day, booked before 6pm | Emailed the same working day as your appointment |
| Priority Same-Day | £350 | Earliest available appointment, including today | Emailed the same working day as your appointment |
Booking after 6pm? An appointment the next day is then sold as Priority Same-Day, and the diary shows the price against each time before you pay.
Full details on the pricing page.
Frequently asked questions
Does every director have to give a personal guarantee on an SPV mortgage?
Usually the lender requires a guarantee from each director, and often from significant shareholders too. Each person who signs normally needs their own independent legal advice and their own certificate, so our fixed fee is per person. You can all be added to one booking, with the appointments back to back.
Does The Mortgage Works require a personal guarantee?
Yes, for limited company mortgages. Its published criteria say personal guarantees are required from all directors in all cases, and its deed of guarantee says you must take independent legal advice before you sign. We complete The Mortgage Works' forms regularly.
Does the guarantee need a witness?
Usually, because most buy-to-let guarantees are signed as deeds. Your witness must be physically with you when you sign, and independent: The Mortgage Works' form, for example, says the witness cannot be related to the borrower or the guarantor. They join you on camera for the signing at the end of the appointment.
Is a limited company buy-to-let guarantee different from a normal personal guarantee?
The legal effect is similar (you personally back the company's borrowing), but the context is a property mortgage rather than a business loan, and the guarantee often ties in with the mortgage conditions. Your solicitor explains the specific document in front of you.
What is a deed of subordination?
A document in which you agree that money you have lent to the company will not be repaid ahead of the lender. Buy-to-let lenders sometimes ask for one alongside the guarantee when a director has lent the company money. See deed of postponement or deed of subordination.
Will your certificate be accepted by my buy-to-let lender?
Our certificates are prepared to satisfy standard lender requirements. If your lender uses its own certificate form, email it to info@ilahub.com when you book and your solicitor will complete that instead.
How quickly can I get my certificate?
On every tier the certificate is emailed the same working day as your appointment. The fee only affects how soon the appointment is: Standard (£150) from two days ahead, Fast Track (£250) the next day, booked before 6pm, and Priority Same-Day (£350) at the earliest available time, including same day.
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